CenterPoint Energy Houston Electric, LLC v. Public Utility Commission of Texas
2013 Tex. App. LEXIS 10363
| Tex. App. | 2013Background
- CenterPoint Energy Houston (CenterPoint), a PUC-regulated utility, ran 14 energy-efficiency programs in 2008 that exceeded the PUC rule 25.181 demand-reduction goal (achieved ~30% vs. 15% target), producing ~$83.4M net benefits.
- CenterPoint’s rates were set to collect ~$23M annually for energy-efficiency: ~$13M from prior base rates and $10M from a 2006 settlement that required CenterPoint to spend that $10M on designated programs instead of reducing rates further.
- CenterPoint spent $24.3M in 2008 (about $1.3M over the $23M), and calculated a performance bonus under 16 Tex. Admin. Code §25.181(h) of ~$4.85M (capped at 20% of program costs).
- PUC staff, OPC, and TIEC argued the $10M from the 2006 settlement should be excluded from the bonus calculation because those programs were not "implemented under" rule 25.181; the PUC adopted that view and awarded a reduced bonus ($2.854M) and lower carrying costs.
- CenterPoint sought judicial review; the district court affirmed the PUC. The court of appeals reversed, holding the PUC misinterpreted "programs implemented under [rule 25.181]" and remanded for recalculation of the bonus and carrying costs.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether programs funded by the $10M settlement are "implemented under" PUC rule 25.181 and thus includable in the bonus calculation | All 2008 programs (including those funded by the $10M settlement) were market-based or market-transformation programs administered to meet rule 25.181 goals and therefore count toward the bonus | The $10M settlement-funded programs were not "implemented under" rule 25.181 because the funds were part of a prior settlement (rate-designated/overcollection) and thus should be excluded from the bonus base | Reversed PUC: programs count if they are the types of programs administered to achieve rule goals regardless of intermediate funding source; include the $10M-funded programs |
| Whether PUC’s reduction of carrying costs should stand (dependent on correct bonus amount) | Carrying costs must be recalculated based on the correct performance bonus (i.e., including the $10M) | Carrying costs depend on the bonus the PUC awarded; no separate defense once bonus is corrected | Reversed PUC on carrying costs and remanded for recalculation consistent with corrected bonus |
Key Cases Cited
- Rodriguez v. Service Lloyds Ins. Co., 997 S.W.2d 248 (Tex. 1999) (standard of deference and review for agency rule interpretation)
- TGS-NOPEC Geophysical Co. v. Combs, 340 S.W.3d 432 (Tex. 2011) (apply statutory construction rules to administrative rules)
- First Am. Title Inc. Co. v. Combs, 258 S.W.3d 627 (Tex. 2008) (agency intent and rule interpretation principles)
- Public Util. Comm’n of Tex. v. Gulf States Util. Co., 809 S.W.2d 201 (Tex. 1991) (limits on deference where agency interpretation conflicts with regulation text)
- City of Corpus Christi v. Public Util. Comm’n, 51 S.W.3d 231 (Tex. 2001) (context on Texas electric industry regulation)